Stocks, bonds and commodities: How global markets have traded the Iran war

• South Korea's Kospi index fell nearly 20% in March, the steepest decline globally, while most major equity indices entered negative territory with Asian and European markets suffering more than U.S. counterparts due to higher energy import dependence
• Oil prices skyrocketed with WTI crude up 48.6% and Brent up 57.7% for the month, while natural gas futures surged 74.6%, driving euro zone inflation above the ECB's 2% target to 2.5%
• Gold is on track for its worst monthly performance since 2008 despite its safe-haven status, pressured by a stronger dollar (up 3% in March) and rising bond yields as markets reprice expectations from rate cuts to potential rate hikes

Market Summary: Global Assets Amid U.S.-Iran War

Key Market Movements

Global financial markets have experienced significant volatility over the past month due to the ongoing U.S.-Iran conflict. Bearish sentiment has dominated across asset classes, with energy commodities emerging as the primary exception.

Equities

Major stock indices have suffered substantial losses:

• South Korea's Kospi plummeted nearly 20% in March, marking the sharpest decline among major markets
• International indices underperformed U.S. markets, reversing 2025's strong gains
• Goldman Sachs warned of increased stagflation risks, noting equity returns historically fall to -1% quarterly during such periods versus +3% in normal conditions

Asian and European markets faced heavier pressure due to greater dependence on oil and gas imports compared to the U.S.

Bonds and Currencies

Government bond yields rose sharply as investors repriced interest rate expectations, with some European bonds reaching multi-year highs. Rate cut expectations diminished, replaced by anticipations of hawkish monetary policy.

The U.S. dollar index gained approximately 3% in March, clawing back losses from post-"liberation day" tariff announcements. Energy-driven stagflation risks supported dollar strength.

Commodities

Energy: Brent crude surged 57.7%, WTI crude jumped 48.6%, and Dutch TTF natural gas futures soared 74.6%. The Strait of Hormuz blockade severely disrupted global oil shipping.

Metals: Gold heads toward its worst month since 2008 despite traditional safe-haven status. UBS maintains bullish outlook, forecasting $6,200/oz by June. Copper prices declined amid economic pessimism.

Inflation Impact

Euro zone inflation climbed to 2.5% in March, exceeding the ECB's 2% target, with energy inflation hitting 4.9%.